If you Sell the Farm, Sell it to a Farmer.

In The One Big Beautiful Bill, Congress added Section 1062. This section allows a person who sells farmland to a farmer to defer the tax on the gain over 4 years. The election must be made one the due date of the return. There are some restrictions on income levels. Additionally, you must put a covenant in the deed restricting the use to only farming for 10 years. You also must have been using the property for farming (or leasing it to a farmer) for ten years. But if you own a farm and want to sell it, this is a great opportunity to do so.

Trump Accounts – Don’t shoot the messenger

Starting July 1, 2026, if you have a newborn from 2025-2028, that baby gets $1,000 in a Trump account free from the Government. It grows tax deferred and at age 18 its turns into a traditional IRA, if the child doesn’t take it out. You or the grandparents can contribute up to another $5,000 per year to the account. This is a great way to grow money for your children in the future.
Even if you don’t have a newborn, but have a child under 18, you can still open the account and donate up to $5,000 per year. Even that onetime give will grow without tax.

You are limited to specific mutual funds for investments which the Treasury Department designates. So despite the name, this is a good deal for your children. Use it.

No tax Deadlines from January 20, 2020-July 10, 2023

The US Court of Federal Claims ruled that due to COVID pronouncements in conjunction with Section 7508A of the Internal Revenue Code which deals with tolling statutes during disasters. President Trump’s declaration for COVID was made January 20, 2020 and was not removed until done so by President Biden on May 11, 2023. Add 60 days to it and you have July 10, 2023 as the operative date for filing any return during that period. The IRS has not and probably will not acquiesce to this decision. However, if you have a client being audited for 2019-2022 years or paid those taxes late, they might get a break from this decision. You can state that the interest for that period 1/20/20-7/10/23 is unagreed and any penalties are not assessable if accruing during that period of time.

Little Known provision could get Revenue Agent in hot water

Section 7214(b) reads as follows: Any internal revenue officer or employee interested, directly or indirectly, in the manufacture of tobacco, snuff, or cigarettes, or in the production, rectification, or redistillation of distilled spirits, shall be dismissed from office; and each such officer or employee so interested in any such manufacture or production, rectification, or redistillation or production of fermented liquors shall be fined not more than $5,000.

Note the word “shall” be dismissed from office. There’s no way around that. Notice the word “indirectly”. Let’s say a Treasury employee buys almost any mutual fund that owns stock. Chances are one of the stock holdings is Altria or ImBev Altria make cigarettes and is one of the largest distillers in the world. ImBev owns Budweiser which in turn owns lots of other breweries and distilleries. So, simply by owning an interest in a mutual fund that invests in these or other similar companies, is a mandatory firing offense and gets you fined. And remember these mutual fund companies are trading all of the time. So in a moment in time, they might own one of these dreaded stocks.

So, the moral of the story is that if you are an IRS employee, look at what these mutual funds invest in. There are some mutual fund companies that are religious based and do not invest in alcohol or tobacco producing stocks. They returns are not as high, but you can keep your job.

2025 is inching closer

All of the Trump era tax cuts expire in 2025. One of the primary ones is the Estate Tax Exemption amount was raised from $5 Million per person to $10 Million per person ($20 Million per couple). If you’re estate is above $10 Million, now might be a good time to start making gifts. The IRS has issued guidance stating that if you made gift before 2025, the gift will be honored. (Of course Congress can always change that). There are a number of Trust options available to you to allow you to keep the income from the property and give away a remainder. Also with interest rates jumping up 1000% in 2022 (0.44% to 4.8%) , some planning techniques should be explored sooner rather than later as the Federal Reserve continues to tighten the money supply.